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DBL%20Hendrix%20small.png College chemistry, 1983

Derek Lowe The 2002 Model

Dbl%20new%20portrait%20B%26W.png After 10 years of blogging. . .

Derek Lowe, an Arkansan by birth, got his BA from Hendrix College and his PhD in organic chemistry from Duke before spending time in Germany on a Humboldt Fellowship on his post-doc. He's worked for several major pharmaceutical companies since 1989 on drug discovery projects against schizophrenia, Alzheimer's, diabetes, osteoporosis and other diseases. To contact Derek email him directly: Twitter: Dereklowe

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« Merck Site Announcements - Closures and Otherwise | Main | The Horror Of Asking For Data »

July 8, 2010

Why Close One Research Site Over Another?

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Posted by Derek

There's been so much traffic here today that it's actually been a bit difficult to get in to write another post. And unfortunately it's all due to the Merck announcement. Some sites that have a long and distinguished history of drug discovery are set to be closed up as if they were so many redundant discount store locations.

And that shows you that no one in the business is thinking about these things - how hey, this site has really done a lot for us (or more than they should have, given their size), and maybe we should hold on to them. As past closings at other companies have shown, that's probably one of the last factors on the list, and most of the time it probably doesn't even come in at all.

What matters, I'd say, is what you'd think matters: the sheer accounting cost. How much does it cost to keep Facility X open? How much would it cost to close it? And how much would we save, compared to what we're giving up? It's that last part where the real arguing starts, because there are many people (I'm one, sometimes) that say that research cultures vary from place to place, and that some sites just seem to have a better history of discovery than others. They're not interchangeable.

But it's very hard to make that argument. This sort of thing doesn't show up in the financial statements, and it's hard to quantify. You also can't count on it, either, because some places will have a good run of many years, and then (for some reason) go flat. Despite what consultants will tell you, I don't think that anyone has figured out what exactly makes a research culture work. That makes fixing a broken one a tall order, and it also makes it very hard to raise one in the way that you want it. It's a combination of the individual people, their managers, the projects they get to work on, the experience that they have (or get) with success. . .all sorts of hard-to-deal-with variables.

It's not just in research institutes, either: why did Hungary produce its ferocious run of world-class scientists during the mid-20th century? Who wouldn't want to reproduce such a thing, or remake the old Bell Labs, or whatever your favorite success story might be. The fact that no one seems to be able to do this on demand argues strongly that no one knows how. And if no one knows how, no one's going to decide based on it, either. Sad.

Comments (52) + TrackBacks (0) | Category: Business and Markets | Who Discovers and Why


1. Anonymous on July 8, 2010 3:39 PM writes...

Regarding Merck's decisions. They are quite straightforward

Key driver: consolidate into geographically proximal sites all in the same time zone.
Reason: A top-down, autocratic management style was requiring excessive travel of key decision makers. Local sites couldn't be trusted to make decisions without input from Upper Gwynedd.

Secondary drivers: Generally keep sites with newer physical facilities, eliminate older sites. Most of SchP sites were physically older. Key exceptions: WP. RY and Kenilworth (see key driver which trumps secondary driver). Second exception: SchP Cambridge site was on the blocks immediately because of MRL Longwood. MRL would never take the publicity hit of closing that building preferentially over the Cambridge.

Third driver: Move all key MRL contributors out of MF before closing. The ones believed to contribute to MF's success had already been moved to Merck Longwood.

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2. Dr Who on July 8, 2010 3:40 PM writes...


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3. Hap on July 8, 2010 4:15 PM writes...

If you don't know how to create or maintain an effective research culture, doesn't that imply that you might want to keep the effective pieces you do have? Cutting costs is understandable, but any cost is unsustainable if you don't produce anything worthwhile, and getting rid of those that do produce seems to be a good idea if you're looking not to produce anything. It also makes outsourcing no lead-pipe cinch - if you can't foster a research culture, then you won't be able to get cheaper people to produce either (and if you're really lucky, they might figure out how to do it themselves and leave you without products and with competitors).

Destroying what you can never make on your own doesn't make you powerful in the long run (though, I guess, it may you rich, which is why it's happening), just stupid or evil and king of your very own rockpile. Hope it's worth it.

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4. x on July 8, 2010 4:18 PM writes...

Sure, you can remake something like the old Bell Labs. You just need good and hard working scientists for research and a lot of patience instead of managers in suits attending meetings and talk about time lines and global decisions.

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5. x on July 8, 2010 4:21 PM writes...

Sure, you can remake something like the old Bell Labs. You just need good and hard working scientists for research and a lot of patience instead of managers in suits attending meetings and talk about time lines and global decisions.

And, by the way, we laughed at Rich Tillyer several times today in The Netherlands in those 15 minutes. That was great.

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6. Oss on July 8, 2010 4:47 PM writes...

The arguments given by Merck management are conflicting. On the one hand they say research needs to be concentrated in large units. On the other hand they say they want / need to collaborate with other parties, and speak almost enthusiastically about a new science campus for biotech startups on the former Organon site. Why first demolish a site and then try to rebuild it?

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7. Anonymous on July 8, 2010 4:51 PM writes...

I agree with Derek’s post. You can't simply extract "key" people out of a site and expect success to be transferred. I believe that MF had such a unique vibrant research culture because of all the "little" people who worked together to create it.

Once moved, these key players are usually quick to adopt the status quo. I’m sure we can think of many examples....

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8. J-bone on July 8, 2010 6:07 PM writes...

2. Dr Who on July 8, 2010 3:40 PM writes...



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9. Eric Jablow on July 8, 2010 6:11 PM writes...

John von Neumann once joked that the Hungarians were really from Mars. After all, they speak a language unrelated to all the nearby languages, and they are all incredibly smart. Consider Theodore von Kármán, Leó Szilárd, Eugene Wigner, Edward Teller, and Paul Erdős.

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10. Ivebeenmercked on July 8, 2010 6:34 PM writes...

Can't agree more about culture varying from place to place. Taking senior people and moving them and hoping the culture goes with them is wishful thinking. #7 has it right, it's the people in the trenches that matter. Well run small sites (like MF) can maintain a very small gap between perception (management) and reality (bench scientists). The problem with large sites is this gap grows quickly with middle managers feeding senior management a load'o'crap to keep them happy. No one listens to the troops as they march them into yet another hopeless battle.

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11. anonymous on July 8, 2010 6:51 PM writes...

It's clear that many companies keep sites open in, e.g., Hungary, Italy, other small European countries because these are countries that are often left off of European patents. Need to screen but can't do it in Germany? Do it in Budapest!

Also, small countries have national health services that are customers, too. The Poles threaten to pay less for your drugs? Threaten to close a site!

I'm sure there are lots of other non-scientific reasons to keep non-productive sites.

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12. Frylock on July 8, 2010 6:53 PM writes...

One of the key differences between the Old Merck and New Merck is that in the Old Merck I had one supervisor (who actually had expertise in his area and was present in the lab) and I attended a meeting every 2 weeks. Under the post-BRGOS New Merck I have FOUR managers (one of whom sort of has expertise) and I attend at least 2 meetings per week. I guess the good thing is that they visit our building two times a quarter, but they still have "helpful" guidance about how the research should be carried out. And I just love the deer in the headlights looks I get when I explain what I'm doing. On a good day it seems like our management is using "Dilbert" as a model for running a busniness. On a bad day it seems like they are using "Aqua Teen Hunger Force" for a business model. And lately there have been a lot of bad days....

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13. anon the II on July 8, 2010 7:48 PM writes...

The Hungarian language is most closely related to Finnish. Or so I am told.

How'd that happen?

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14. Sili on July 8, 2010 7:59 PM writes...

It's not just in research institutes, either: why did Hungary produce its ferocious run of world-class scientists during the mid-20th century? Who wouldn't want to reproduce such a thing
Well, for one you'd need a world war, rampant nationalism, splitting up and countries and families and a good helping of good old-fashioned hate of Jews thrown in for good measure.
John von Neumann once joked that the Hungarians were really from Mars.
I hadn't heard it like that. I don't know who made the rejoinder, but supposedly when Fermi asked "Why aren't they here?" (about ETs - the Fermi Paradox), their response was "Oh, but they are. We just call them Hungarians."

Why does everyone always forget de Hevesy? He got a Nobel Prize in friggin' Chemistry.

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15. NHR_GUY on July 8, 2010 9:34 PM writes...

Ann Arbor

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16. robkral on July 8, 2010 9:50 PM writes...

Any small company that thinks they can achieve continuity by being acquired should be thoroughly disabused of that notion. The bigs have inadequate pipelines because of their top-heavy, bureaucratic style so they go out and acquire smaller, more agile and productive companies. Then they kill off the productive aspects of the smaller companies so they can perpetuate their own unproductive careers.

Be warned.

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17. ExMRK on July 8, 2010 9:58 PM writes...

They might have had a better chance at discovering new drugs if the IT people hadn't rationed access to helpful tools like SciFinder and Crossfire, essentially running R&D.

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18. @13 Anon the II on July 9, 2010 12:51 AM writes...

The Finns & Hungarians (Magyars) both originated from Central Asia. While migrating towards Europe in the wake of the Germanic Tribes & Huns, their common progenitors split off into northern (Finns & Estonians) & southern (Magyars) branches. The Hungarians retain some Asiatic traditions, such as placing surnames before given names. Then came the Western Slavs, Mongols, and Romani (Gypsies).

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19. RB Woodweird on July 9, 2010 6:16 AM writes...

Sounds like decisions are being made by those who know the cost of everything and the value of nothing.

The ATHF as business model: Frylock is probably a bench chemist, Master Shake is middle management, and Meatwad is the CEO. comes in as a consultant. The Robotic Ghost of Christmas Past from the Future? Probably some regulatory body.

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20. MC2process on July 9, 2010 6:18 AM writes...

Never have any problem getting access to SciFinder or Crossfire since working here. Is this rationing more on the 'R' side than the 'D' side?

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21. RTW on July 9, 2010 8:20 AM writes...

15. NHR_GUY - Yes - What about Ann Arbor? The goose that laid the golden egg, that was killed by big blue?

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22. NHR_GUY on July 9, 2010 8:24 AM writes...

RTW - nuff said

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23. Anon on July 9, 2010 9:32 AM writes...

There was never any rationing of IT services at MRL. Someone on here keeps saying that, and it's just not true..

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24. MedChem on July 9, 2010 9:34 AM writes...

#7 and 10 (#7 has it right, it's the people in the trenches that matter)

I couldn't agree with you guys more!! You hit the nail on the head and it's a fact that the empty suits refuse or are too afraid to admit and recognize. That's why they focus on creating a wonderful fasade with all kinds of paradigms and initiatives which at best are common sense and at worst bullshit, while at the same time destroying the spirit of the little people in the trenches who actually create value.

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25. Vader on July 9, 2010 10:21 AM writes...

A distinguished history of drug discovery should certainly be taken into account when choosing sites to close, but it's not dispositive in itself.

Garfield used to be entertaining once, but it's run out of fresh ideas and is now a waste of column space in my local newspaper's comics page.

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26. CB on July 9, 2010 11:59 AM writes...

I completely agree that we have no ideas what ingredients produce great research teams.

I have seen examples where research productivity has been killed by moving productive labs into state of the art "open" and "collaborative lab space". Toss in employee stress and the feelings of corporate betrayal and you have a recipe for stagnation.

It seems the main merger beneficiaries are the CEOs and bankers who receive fat bonuses.

Are there any good examples of two large companies merging and yielding in a more productive R&D environment?

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27. Vader on July 9, 2010 12:39 PM writes...

Productive labs are not organized by managers. Productive labs are organized by their own scientists when they are given funding and freedom.

The smart manager understands this, understands that you do not herd cats, understands that smart scientists must be wooed and not browbeaten. Unfortunately, such smart managers are at least as rare as smart scientists.

All they see are the huge risks of giving scientists funding and freedom. Those risks are genuine. They are also unavoidable if you want a shot at the big payoff.

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28. 7 on July 9, 2010 1:25 PM writes...

Completely agree with Vader. There are real risks turning scientists loose with lots of cash.

Industrial scientists need to be innovative and objective driven (a hard balance to strike).
Scientific training does not focus on practically and solving real problems but rather puzzle solving and hyping up self serving work. Look at the literature, how many redundant and useless “new” methods are there when a simple high yielding two step procedure exists.

There needs to be both reward and accountability in industrial science. How many times do we find ourselves doing things that we know have no real value because we are simply told to?

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29. Doo-dah on July 10, 2010 3:37 AM writes...

With all the bemoaning going on, you'd think the MRL labs had produced blockbuster after blockbuster, or at least some breakthrough drugs during the past decades. Sorry guys, but it has not been so productive. Period. MRL wasted its share of money on genomics; no major breakthroughs, no new drugs of any note. MRL wasted its share of money on endocrinology; no major breakthroughs, no new drugs of any note. MRL wasted its share of money on pulmonary; no new drugs of any note. Does anyone see a theme here?

The reason big pharma is buying biotechs is simple: big pharma's labs have been producing, and biotech's have. Just look at the NDAs approved during the past decade. It's an unpleasant fact, but fact it is.

I notice that the development side, esp clinical, didn't fare that badly, if at all. They've done exactly what they were asked to do, ie, be productive. Cranking out NCEs that never amount to much isn't a show of productivity.

Given the lack of productivity, I think those researchers left employed at MRL should consider themselves lucky. They've been given a gift, a second chance at being productive. Maybe this time, they'll succeed.

As for the suits, yes, they're a problem. But they're also rational, and if your project(s) are getting approved, it's because you didn't make a strong enough case to the suits.

The truth hurts. Consider it tough love.

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30. Mutatis Mutandis on July 10, 2010 7:09 AM writes...

The fundamental problem with the way in which drug discovery is managed, is that it relies on illusions generated by the abuse of management tools.

The people trapped by this first try to quantify success by setting some arbitrary target for productivity, say five NMEs per year, ignoring the reality that discovery is a hit-or-miss game. If you want five NMEs, chances are that you will indeed be given five NMEs, but that their quality will be totally unpredictable. The reality is that profitable drugs come in starts and fits, not according to some predictable pattern.

Managers then decide to boost "efficiency" by reducing "cost", generally ignoring the complex and certainly non-linear relationship, full of feedback loops, between productivity and investment. (Recently a piece of such managerial gobbledygook, dressed up in equations to stun people into assigning it credibility, was even published in Nature Drug Discovery Review.) Typically such approaches are penny-wise and pound-foolish, creating expensive bottlenecks by cutting cost in so-called "non-essential" areas while pouring money into so-called "critical" domain. The archetypical example is the very expensive automated combinatorial chemistry robot that is never used because there is nobody to maintain it, so it's always broken.

Another element often ignored is that the most valuable discoveries are often, if not purely serendipitous, then at least in the exploratory margin. Cost cuts tend to remove this margin, driving research to panning the same sand over and over again for ever-smaller flecks of gold.

The final insult to common sense is to let loose the tools of process management on discovery, as if basic research were process-driven. This produces nice timelines according to which you are supposed to have the assay in May, the first hits in August, leads in December, and do animal trials in June of next year. This piece of absurd fiction, worthy of Ionescu and Beckett, is then use to allocate people and do laboratory planning.

The reactions of most scientists in drug discovery, as far as I can observe, fall apart in three categories. One is to get angry and frustrated. (Check) The second is "if you can't beat them, join them", which drives scientists to climb the managerial ladder, where they sadly tend to repeat all the mistakes they had promised themselves to avoid. (Probably check.) And the third, common among the more flegmatic type of scientist, is to regard management as one of the unavoidable vicissitudes of life, like the weather, and just try to ignore it.

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31. Mutatis Mutandis on July 10, 2010 8:52 AM writes...

7 (post #28), yes there are big risks in turning scientists loose with lots of cash.

On the other hand, let us remember that there are big risks in turning managers loose with lots of cash. The lesson of the historical record of this industry has one sobering lesson: NONE of the various tricks, fashions and fads that have been promoted as "the" method to make it more profitable, has made a significant difference. There have been a lot, from combinatorial chemistry and screening a million compounds over portfolio management to today's fashion for outsourcing, and so far none of them has provided more than a small incremental improvement, if any at all. Yet our management continues to invent new formulas for snake oil -- we are addicted to it.

There is a lot to be said then, for knowledge-driven opportunism. The truth is that we don't know a reliable method to turn out drugs. But as long as it remains a game of chance, we should at least strive to recognize opportunities and extract maximal benefit from them. This implies two things that we can usefully do. One is maintaining and extending our skill basis, so that we become better at recognizing opportunities and dangers, and that is the tasks of the scientists. The other is to play the game in an area where the returns are large IF you win, and that is the role of company management.

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32. Anonymous on July 10, 2010 9:45 AM writes...

I love how when things go right, it’s because management did such a good job. When things go bad, it’s the R&D.

Considering the pay scale and responsibilities shouldn’t management be ultimately accountable?
Sounds like the deck is stacked, if you can’t beat them join them. MBA here I come.

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33. Lu on July 10, 2010 10:03 AM writes...

Sites don't do discoveries.
People do.

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34. Anonymous on July 10, 2010 11:34 AM writes...

I love the way you guys always go back to the same subject no matter where Dereck starts. Stop complaining! Leave the damn industry if it is so bad. Sorry I frequent cafepharma too much. But at least those guys know how to talk straight in plain language and simple sentences when they whine.

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35. Phil on July 10, 2010 1:11 PM writes...

I love the way Anonymous complains about the complainers. If you don't like listening to scientists gripe about how bad management is, then don't read the comments section of Derek's posts that are, in essence, more articulated critiques of management in pharma.

Stop complaining! Leave the damn comments section already!

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36. Anonymous on July 10, 2010 1:37 PM writes...

Merck should have closed SIRNA instead of Merck Frosst. But it would have made Peter Kim look really bad.

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37. sesquiterpenois on July 10, 2010 2:50 PM writes...

Merck had no qualms about abandoning its La Jolla operations after a short test drive. Pfizer didn't even use some of its new space in New London prior to dumping it. Neither company has expressed reservations about closing prestigious and productive legacy sites of acquired companies. I don't know how much these sites cost to establish and operate in comparison to Merck-Longwood, but the dollar amounts couldn't have been trivial. Therefore, who in the research ranks can say which R&D sites deserve to stay open? It's a good thing that Merck doesn't have any large third-world R&D sweatshops like Pfizer, BMS, GSK, and Novartis. Heaven forbid the number & quality of leads from Asian sites exceeds those of from the West. Throw in a little political maneuvering with voluntary repatriation and you get the unstoppable decline of Big Pharma in the US and Europe.

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38. Anonymous on July 10, 2010 5:12 PM writes...

why do you call those Asian operations sweat shops, simply because they are cheaper to operate? Based on what I know, the employees's there much more competitive locally, although they are paid less than those here. But this is simply because the standard of living is lower and everything is much more affordable there.

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39. Anonymous on July 10, 2010 5:13 PM writes...

why do you call those Asian operations sweat shops, simply because they are cheaper to operate? Based on what I know, the employees's pay there is much more competitive locally, although they are paid less than those here. But this is simply because the standard of living is lower and everything is much more affordable there.

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40. @anonymous07/10/10 on July 10, 2010 6:26 PM writes...

I think that poster was referring to more than just the lower pay of the Chinese and Indian operations. I heard from former colleagues who returned to their home countries that the Asian CRO work schedules are longer and have less vacation time than in the US (definitely less than Europe). Job evaluations are apparently more quota-driven. Although we in the US complain about being treated as numbers by our employers, I guess that the sense of dehumanization is more pronounced overseas.

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41. Anonymous on July 10, 2010 10:55 PM writes...

lol #35 BOOM!

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42. cliffintokyo on July 11, 2010 7:53 PM writes...

Reading all the wry comments here from the *foot soldiers* makes me think that 'The Grand Old Duke of York' rhyme is particularly appropriate.
".......He had 10,000 men,
He marched them up to the top of the hill,
And he marched them down again.
And when they were up, they were up,
And when they were down, they were down,
And when they were only halfway up,
They were neither up nor down!"

#19, first sentence, also seems especially apt.

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43. likeitis on July 11, 2010 8:01 PM writes...

RE #42
Perhaps the 21C version should be:
"He marched them up to the top of the hill....
And shot them"

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44. Anonymous on July 12, 2010 5:27 PM writes...

Re # 43.
This would be particularly appropriate if the Duke of York's name was Fred Hassan.

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45. WackyChemist on July 13, 2010 7:38 AM writes...

Anybody willing to move? MRK's building a plant in China.

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46. Charles Frosst on July 13, 2010 9:08 PM writes...

Any big pharma stepping in to buy MF? Sounds like a deal...a few blockbusters for the price of 1/10 the cost of running the Merck site in Boston...Planting a seed...

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47. Anonymous on July 14, 2010 7:42 PM writes...

I would buy it if I had the money!!

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48. Anonymous on July 15, 2010 1:27 PM writes...

Combining the Merck Frosst site and the Union site would give the owner pretty much everything needed to start up a company...just need some smaart people...of which there are plenty looking right now.

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49. Mary on July 15, 2010 3:07 PM writes...

Closing of MF site in Canada:the R & D sector are a very dedicated group of professionals with many years of dedication service to Merck Frosst and are an amazing team which is a precious gem. At this site there are many families where both spouses work at the same site. In real life, this is a hard pill to swallow being on the other end of the balance sheet

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50. Anonymous on July 18, 2010 4:21 PM writes...

Closing MF is beyond words to an longtime R&D person from the outside. Time for MRK senior management to hang up the gloves and go home before they do more damage.

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51. Anonymous on July 24, 2010 12:47 AM writes...

No.1 anonymous is spot on. However don't forget the US/CA disconnect..from an outsider who did interview at the MF site a way back. I detected some US/CA issues. Humm...

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52. Andrew Dalke on July 29, 2010 9:44 PM writes...

I read an (auto?)biography of one of the Hungarians and it seemed pretty clear that pre-war Europe countries were organized around different schools, so that mathematicians from one country tended to focus on particular fields, and those in other countries focused on others.

The Hungarian math education tended towards the sort of math needed for mathematical physics. In addition, they had a strong culture of cooperative self-learning which meant groups of students would meet and challenge each other towards more interesting problems and better work.

On top of that, these were strongly Jewish, and Nazism helped make the decision to move to the US.

The combination of right people, right time, and right training is rare, which makes it stand out.

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